Author Topic: FFH results  (Read 13888 times)

petec

  • Hero Member
  • *****
  • Posts: 1018
Re: FFH results
« Reply #10 on: February 17, 2017, 05:41:35 AM »
There investing results during a huge bull market have continued to be as pathetic as imaginable. The company would be in so much better shape if they just put money into an index fund for the last decade.

Yes, they would.   I'm not sure I would have done better though, because I'd probably have had a lot more cash (I used Fairfax as my "hedge" to help me sleep at night despite being close to fully invested).   They were very clear that they were hedged and anyone who is disappointed in the performance of the hedges simply shouldn't have been invested in FFH.   As Gio and others have said, the place to focus is on the poor stockpicking which is where they didn't do what they said they'd do.


Packer16

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2955
  • Go Riders Go! Go Pack Go!
Re: FFH results
« Reply #11 on: February 17, 2017, 06:06:37 AM »
I think some perspective is warranted.  Insurance is primarily about underwriting & fixed income management.  In both of these Fairfax has excelled.  The equity/distress is more of cyclical business with long periods of underperformance offset by periods of outperformance.  FFH has hit an unusual long period of underperfromance like many active managers.

As to the market being near a top, that depends upon interest rates.  If rates stay the same or go down (FFH's view) stocks are cheap.  If they go up to 5% they are overvalued.  Comparing the current earnings yield to historical levels needs to be adjusted for interest rates.  Aswath Damodaran does this on his site/blog & the results are that stocks are still cheap when compared to bonds.

Packer

DCG

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1534
    • Venture Blend
Re: FFH results
« Reply #12 on: February 17, 2017, 07:24:50 AM »
There investing results during a huge bull market have continued to be as pathetic as imaginable. The company would be in so much better shape if they just put money into an index fund for the last decade.
They were very clear that they were hedged and anyone who is disappointed in the performance of the hedges simply shouldn't have been invested in FFH.


Yeah, but in affect, they're basically saying "if you're looking for a company with a competent investment team, look elsewhere'.


They don't have to invest their float in equities. It's up to them to determine the best way to allocate this capital. And they've done a terrible job at that capital allocation for about 9 straight years.

petec

  • Hero Member
  • *****
  • Posts: 1018
Re: FFH results
« Reply #13 on: February 17, 2017, 07:54:23 AM »

Yeah, but in affect, they're basically saying "if you're looking for a company with a competent investment team, look elsewhere'.


If a bad patch makes you incompetent, then yes.   And admittedly it's been a long bad patch (after a stellar patch).   But I don't pay them 1% plus a performance fee to beat the major indices.   I pay them a salary (and not a particularly big one) to protect their company and compound book value at a moderate rate.   I don't have serious complaints about the hedges.   I do worry about the stockpicking.   What really intrigues me is whether they will learn from their investing mistakes (as they clearly learned from their insurance acquisition mistakes).

giofranchi

  • Hero Member
  • *****
  • Posts: 5486
  • Twitter: @giovfranchi
    • Master School Politecnico di Milano
Re: FFH results
« Reply #14 on: February 17, 2017, 08:21:50 AM »
What really intrigues me is whether they will learn from their investing mistakes (as they clearly learned from their insurance acquisition mistakes).

Yeah! That's basically the reason why I am still holding it.
We'll see!

Cheers,

Gio
Portfolio: AMZN, BRK.B, DIS, FB, FFH, FWONA, GOOG, IBB, JNJ, JPM, LBRDA, MKL, NKE, PCLN, QQQ, SBUX, SMH, V, VHT, XBI

Partner24

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 727
Re: FFH results
« Reply #15 on: February 17, 2017, 08:29:04 AM »
Here are the facts:

- Weather forecasts. They tried to predict rain. The sun shined a lot. How about building a ship that will do fairly well at both and bad times instead of predicting weather like that? Instead of trying to be wrong...wrong..wrong....right, what about ...ok if wrong or right...ok if wrong or right...ok if wrong or right...just like Berkshire and Markel?

- Cigar butts equities. Did very well when they had small to mid size money to invest. Did mediocre with a big portfolio.


giofranchi

  • Hero Member
  • *****
  • Posts: 5486
  • Twitter: @giovfranchi
    • Master School Politecnico di Milano
Re: FFH results
« Reply #16 on: February 17, 2017, 09:05:20 AM »
Here are the facts:

- Weather forecasts. They tried to predict rain. The sun shined a lot. How about building a ship that will do fairly well at both and bad times instead of predicting weather like that? Instead of trying to be wrong...wrong..wrong....right, what about ...ok if wrong or right...ok if wrong or right...ok if wrong or right...just like Berkshire and Markel?

- Cigar butts equities. Did very well when they had small to mid size money to invest. Did mediocre with a big portfolio.

+1!

Cheers,

Gio
Portfolio: AMZN, BRK.B, DIS, FB, FFH, FWONA, GOOG, IBB, JNJ, JPM, LBRDA, MKL, NKE, PCLN, QQQ, SBUX, SMH, V, VHT, XBI

Value^2

  • Full Member
  • ***
  • Posts: 117
Re: FFH results
« Reply #17 on: February 17, 2017, 09:34:55 AM »

Yeah, but in affect, they're basically saying "if you're looking for a company with a competent investment team, look elsewhere'.


If a bad patch makes you incompetent, then yes.   And admittedly it's been a long bad patch (after a stellar patch).   But I don't pay them 1% plus a performance fee to beat the major indices.   I pay them a salary (and not a particularly big one) to protect their company and compound book value at a moderate rate.   I don't have serious complaints about the hedges.   I do worry about the stockpicking.   What really intrigues me is whether they will learn from their investing mistakes (as they clearly learned from their insurance acquisition mistakes).
you cant sugar-coat their incompetence!

vinod1

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1180
    • My Blog
Re: FFH results
« Reply #18 on: February 17, 2017, 12:23:09 PM »
Included in realized losses in 2016 was a loss of $2,663.9 million realized in the fourth quarter when the company, recognizing fundamental changes in the U.S. which obviated the need for defensive equity hedges, discontinued its economic equity hedging strategy, closing all of its short positions in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes effected through total return swaps.

Donald Trump wins, Tails risks, 1 in 100 year storms, all vanish!!

Debt deleveraging?

All done.

"worried about the speculation in financial markets and the potential for a 50-100 year financial storm"?

No more.

"However, we have warned you many times in our Annual Reports of the many risks that we see and the great
disconnect between the markets and the economic fundamentals."


No more.

"Most investors consider the
2008/2009 recession and crash to be a once in a generation event – and it’s over! We differ because we think we
escaped the serious adverse consequences of that recession as a result of huge fiscal stimulus from the U.S., even
greater fiscal stimulus from China and the reduction in interest rates to 0% with massive monetary stimulus in the
U.S., Europe and Japan through QE programs. There is nothing to fall back on now if the U.S. and Europe slip back
into recession.
"


Now we have Trump!

"The potential for unintended consequences, and therefore of pain, is huge."

There can be no pain with Trump as president.

Vinod
The fundamental algorithm of life: repeat what works. –Charlie Munger

Grenville

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1031
Re: FFH results
« Reply #19 on: February 17, 2017, 12:35:35 PM »
Maybe they are overly comforted with Wilbur Ross on the cabinet?